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Apache is functioning normally

June 4, 2023 by Brett Tams

Adoption is an emotional process and can come with a hefty price tag. Depending on the type of adoption, the total cost can range from less than $1,000 to $60,000 or more.

While some employers have family-building benefits that may include adoption assistance, such as reimbursements and paid leave, adoptive parents more commonly cover these expenses themselves.

Putting cash aside in savings is the most cost-effective way to pay for adoption, but loans can also help cover the costs. Learn more about how adoption loans work, how to compare financing options and other payment methods to consider.

Adoption loans

Adoption loans are personal loans that you can use to pay for expenses such as agency costs, medical and travel expenses and court fees. An adoption loan is money you borrow and repay with interest over a set amount of time, typically two to seven years. Compare adoption loans from banks, credit unions and online lenders to find one with a low annual percentage rate and monthly payments that fit your budget.

Bank loan

Who it’s best for: Existing bank customers with good to excellent credit (a score of 690 or higher).

If you have a good relationship with your bank and strong credit, consider applying for a personal bank loan. Banks typically have low rates and perks for existing customers. In addition, most banks allow borrowers to apply in person at a branch location or online.

Credit union loan

Who it’s best for: Members of a credit union and those with thin credit profiles.

Credit unions can offer low rates and fees on personal loans. Applicants are typically assessed on their whole financial picture when qualifying for a loan, so those with fair or bad credit (scores of 689 and lower) may qualify more easily with a credit union. You must be a credit union member to apply.

Online personal loan

Who it’s best for: Prospective parents who need fast funding and prefer managing their finances online.

Online loans provide a complete online application and funding process. These lenders offer loans to borrowers across the credit score spectrum. However, a higher credit score typically means a lower interest rate. If you need funds quickly, some online personal loan lenders can approve and fund a loan within a few days.

Most online lenders let you prequalify to preview rates and terms on potential loans. It only requires a soft credit check, meaning there’s no harm to your credit score. In addition, prequalifying with multiple lenders lets you compare different loan options to find a low rate and monthly payments that fit your budget.

Loan amount

Interest rate

$5,000-$100,000.

7.49% – 24.49%.

$2,000-$35,000.

9.95% – 35.95%.

$2,000–$50,000.

8.99% – 35.99%.

$5,000-$100,000.

8.99% – 25.81%.

Nonprofit loans

Who it’s best for: Families with a financial need or aligned interests with an organization’s mission.

Some nonprofit organizations or foundations offer loans to prospective parents of adoptees. These loans can cover all or a portion of the adoption cost and come with little or no interest. Organizations such as A Child Waits Foundation may require you to have a co-signer and show evidence of financial need when applying for a loan.

How to compare loan options

Here are factors to consider when deciding between loan options.

APR: The annual percentage rate is the loan’s interest rate plus fees. You can use the APR for an apples-to-apples comparison between loan options. The loan with the lowest APR is the least expensive option.

Monthly payment: A loan’s monthly payment is based on the loan amount, APR and loan term. Payments typically start 30 days after receiving the loan funds. Look for a loan with payments that fit comfortably into your monthly budget.

Fees: Some personal loan lenders charge origination fees from 1% to 10% of the loan amount. Some may also charge a late payment fee.

Loan term: Since the adoption wait time can range from a few months to several years, keep the repayment term in mind when deciding how long you want to repay it. A longer loan term can mean lower monthly payments but higher interest costs.

Other ways to pay for adoption

Family and friends

Family and friends can be a valuable lifeline when it comes to growing your family. Consider talking to family and friends who may offer a low- or no-interest loan or a portion of the money as a gift. Crowdfunding is another way friends and people in your community can help raise funds.

HELOC

A home equity line of credit is a revolving line of credit based on the value of your home. With a HELOC, you can draw money as you need and pay it back monthly, usually at lower rates than a personal loan. It can be a good option if you aren’t sure how much you’ll need upfront. Your home is collateral on a HELOC, which means the lender can take it if you fail to make payments.

Grants

An adoption grant — funds that don’t need to be repaid — is another way to pay for adoption. Organizations such as WAT! (We Adopt Too) Black Family Adoption Assistance, Gift of Adoption Fund and Helpusadopt.org offer grants to cover adoption expenses. With organizations like these, you’ll need to check deadlines and eligibility requirements, like parental status and financial need. Upon applying, you may need to pay a fee, provide references and show proof of an approved home study.

Source: nerdwallet.com

Posted in: Loans, Moving Guide, Personal Loans Tagged: 2, About, All, annual percentage rate, applying for a loan, apr, bad credit, Bank, banks, Benefits, best, black, Borrow, borrowers, Budget, building, co-signer, cost, court, Credit, credit check, credit score, credit union, Credit unions, Crowdfunding, equity, existing, expenses, expensive, Family, Fees, Finance, finances, Financial Wize, FinancialWize, financing, foundation, fund, funds, gift, good, HELOC, home, home equity, home equity line of credit, How To, in, interest, interest rate, Learn, lenders, line of credit, loan, Loans, low, low rates, LOWER, Make, Medical, member, money, monthly budget, More, nerdwallet, offer, online lenders, or, organization, Origination, Other, parents, payments, Personal, personal loan, Personal Loans, price, proof, Raise, rate, Rates, repayment, savings, time, Travel, value, work

Apache is functioning normally

June 3, 2023 by Brett Tams

A couple of closely followed mortgage rates increased over the last seven days. The average 15-year fixed and 30-year fixed mortgage rates both climbed. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, also increased.

On the heels of cooling inflation, the Federal Reserve announced on May 3 a 25-basis-point increase to its benchmark short-term interest rate. The Fed’s May meeting marks what could be the last increase we see for the time being. The central bank has signaled that it may soon be time to pause on rate hikes. Depending on incoming inflation data, the next step would be to hold rates where they are for an extended period of time in order to bring inflation down to its 2% target.

As long as inflation continues to trend downward, experts say a pause in rate hikes from the Fed could bring some stability to today’s volatile mortgage rate market.

Mortgages hit a 20-year high in late 2022, but now the macroeconomic environment is changing again. Rates dipped significantly in January before climbing back up in February. Throughout March and April, rates fluctuated in the 6% range.

“Ultimately, more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates,” says Odeta Kushi, deputy chief economist at First American Financial Corporation.

While rates don’t directly track changes to the federal funds rate, they do respond to inflation. Overall, inflation remains high but has been slowly but consistently falling every month since it peaked in June 2022.

After raising rates dramatically in 2022, the Fed opted for smaller, 25-basis-point rate increases in its first three meetings of 2023. The decision to hike by 0.25% on May 3 suggests that inflation is cooling and the central bank may soon be able to pause its rate hiking regime. While the central bank is unlikely to cut rates any time soon, positive signaling from the Fed and cooling inflation may ease some of the upward pressure on mortgage rates.

“If inflation keeps coming down, that will be the biggest driver, outside of the Fed, that’s really going to help bring rates down to a better level and improve affordability for home buyers,” says Scott Haymore, head of capital markets and mortgage pricing at TD Bank.

However, mortgage rates remain well above where they were a year ago. Fewer buyers are willing to jump into the housing market, driving demand down and causing home prices in some regions to ease, but that’s only part of the home affordability equation.

“Even though home prices in many parts of the country have fallen since the start of the year, high rates make buying prohibitively expensive for many,” says Jacob Channel, senior economist at loan marketplace LendingTree. It’s still difficult for many buyers, particularly those looking for their first home, to afford a monthly payment.

What does this mean for homebuyers this year? Mortgage rates are likely to decrease slightly in 2023, although they’re highly unlikely to return to the rock-bottom levels of 2020 and 2021. However, rate volatility may continue for some time. “Expect mortgage rates to yo-yo up and down in the first half of the year, at least until there is a consensus about when the Fed will conclude raising interest rates,” says Greg McBride, CFA and chief financial analyst at Bankrate. (Like CNET Money, Bankrate is owned by Red Ventures.) McBride expects rates to fall more consistently as the year progresses. “Thirty-year fixed mortgage rates will end the year near 5.25%,” he predicts.

Rather than worrying about market mortgage rates, homebuyers should focus on what they can control: getting the best rate they can for their situation.

“The most important thing is that they find the right home. The second most important thing is obviously to find the most efficient way to finance it,” says Melissa Cohn, regional vice president of William Raveis Mortgage.

Take steps to improve your credit score and save for a down payment to increase your odds of qualifying for the lowest rate available. Also, be sure to compare the rates and fees from multiple lenders to get the best deal. Looking at the annual percentage rate, or APR, will show you the total cost of borrowing and help you compare apples to apples.

30-year fixed-rate mortgages

For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 7.03%, which is a growth of 12 basis points from one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.45%, which is an increase of 18 basis points from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. But a 15-year loan will usually be the better deal, if you’re able to afford the monthly payments. You’ll most likely get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 5.87%, an increase of 8 basis points compared to last week. With an ARM mortgage, you’ll usually get a lower interest rate than a 30-year fixed mortgage for the first five years. But shifts in the market might cause your interest rate to increase after that time, as detailed in the terms of your loan. Because of this, an adjustable-rate mortgage might be a good option if you plan to sell or refinance your house before the rate changes. Otherwise, changes in the market mean your interest rate may be a good deal higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022. Now, mortgage rates are roughly twice what they were a year ago, pushed up by persistently high inflation. That high inflation prompted the Fed to raise its target federal funds rate seven times in 2022. By raising rates, the Fed makes it more expensive to borrow money and more appealing to keep money in savings, suppressing demand for goods and services.

Mortgage interest rates don’t move in lockstep with the Fed’s actions in the same way that, say, rates for a home equity line of credit do. But they do respond to inflation. As a result, cooling inflation data and positive signals from the Fed will influence mortgage rate movement more than the most recent 25-basis-point rate hike.

We use data collected by Bankrate to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the country:

Average mortgage interest rates

Product Rate Last week Change
30-year fixed 7.03% 6.91% +0.12
15-year fixed 6.45% 6.27% +0.18
30-year jumbo mortgage rate 7.06% 6.96% +0.10
30-year mortgage refinance rate 7.07% 7.07% N/C

Rates as of May 23, 2023.

How to shop for the best mortgage rate

To find a personalized mortgage rate, speak to your local mortgage broker or use an online mortgage service. In order to find the best home mortgage, you’ll need to take into account your goals and current finances.

Specific interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Having a good credit score, a higher down payment, a low DTI, a low LTV or any combination of those factors can help you get a lower interest rate.

The interest rate isn’t the only factor that affects the cost of your home. Be sure to also consider other costs such as fees, closing costs, taxes and discount points. Make sure to comparison shop with multiple lenders — like credit unions and online lenders in addition to local and national banks — in order to get a loan that works best for you.

How does the loan term impact my mortgage?

When picking a mortgage, it’s important to consider the loan term, or payment schedule. The mortgage terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are fixed for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only stable for a certain amount of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the current interest rate in the market.

One thing to think about when deciding between a fixed-rate and adjustable-rate mortgage is the length of time you plan on living in your house. Fixed-rate mortgages might be a better fit if you plan on living in a home for a while. Fixed-rate mortgages offer more stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. If you aren’t planning to keep your new house for more than three to 10 years, however, an adjustable-rate mortgage might give you a better deal. There is no best loan term as a general rule; it all depends on your goals and your current financial situation. Make sure to do your research and understand what’s most important to you when choosing a mortgage.

Source: cnet.com

Posted in: Renting Tagged: 15-year, 2, 2021, 2022, 2023, 30-year, 30-year fixed mortgage, 30-year fixed rate, 30-year, fixed-rate mortgage, About, affordability, All, annual percentage rate, apr, ARM, ARM mortgage, average, Bank, banks, before, best, Borrow, borrowing, Broker, buyers, Buying, Capital markets, closing, closing costs, cooling, cost, country, couple, Credit, credit score, Credit unions, data, Debt, debt-to-income, decision, discount points, down payment, driving, DTI, efficient, environment, equity, expensive, experts, Fall, fed, Federal funds rate, Federal Reserve, Fees, Finance, finances, Financial Wize, FinancialWize, First American, first home, fixed, fixed rate, Fixed rate mortgage, funds, General, goals, good, good credit, good credit score, growth, hold, home, home affordability, home buyers, home equity, home equity line of credit, home prices, Homebuyers, house, Housing, Housing market, How To, impact, in, Income, Inflation, interest, interest rate, interest rates, Jumbo mortgage, jump, lenders, LendingTree, Life, line of credit, Living, loan, Local, low, LOWER, Make, market, markets, money, More, Mortgage, Mortgage Broker, mortgage interest, Mortgage Interest Rates, MORTGAGE RATE, Mortgage Rates, mortgage refinance, Mortgages, Move, new, Odeta Kushi, offer, online lenders, or, Other, payments, plan, Planning, points, president, pressure, Prices, Raise, rate, rate hike, Rate Hikes, Rates, Refinance, Research, return, right, save, savings, second, Sell, short, stable, target, taxes, td bank, the fed, time, trend, trends, value, variable, volatility, will

Apache is functioning normally

June 2, 2023 by Brett Tams

WASHINGTON, D.C. – Today, the Consumer Financial Protection Bureau (CFPB) permanently banned RMK Financial Corporation, which does business as Majestic Home Loans, from the mortgage lending industry by prohibiting RMK from engaging in any mortgage lending activities or receiving remuneration from mortgage lending. In 2015, the CFPB issued an agency order against RMK for, among other things, sending advertisements to military families that led the recipients to believe the company was affiliated with the United States government. Despite the 2015 order’s prohibition on these and other actions, the company engaged in a series of repeat offenses, including disseminating millions of mortgage advertisements to military families that deceptively used fake U.S. Department of Veterans Affairs (VA) seals, the Federal Housing Administration (FHA) logo, and other language or design elements to falsely imply that RMK was affiliated with the government. In addition to the ban, RMK will also pay a $1 million penalty that will be deposited into the CFPB’s victims relief fund.

“Even after the 2015 law enforcement order, RMK continued to lie to military families by falsely implying government endorsement of its home loans,” said CFPB Director Rohit Chopra. “Our action reflects our commitment to weed out repeat offenders, and we are shutting down this outfit for good.”

RMK is a privately held corporation with its principal place of business in Ontario, California. RMK is a nonbank that is licensed as a mortgage broker or lender in at least 30 states and Puerto Rico. RMK originates consumer mortgages, including mortgages guaranteed by the VA and mortgages insured by the FHA. However, RMK is affiliated with neither government agency.

In 2015, the CFPB took action against RMK to end its use of deceptive mortgage advertising practices, including advertisements that led potential homebuyers to believe that the company was affiliated with the VA or FHA. RMK sent these deceptive advertisements to tens of thousands of military families as well as to other holders of VA-guaranteed mortgages. In addition to paying a fine, RMK was required to end its illegal and deceptive practices.

The CFPB has previously warned about VA home loan scams. Many servicemembers, veterans, and military spouses receive fraudulent calls and mailers from companies claiming to be affiliated with the government, the VA, or their home loan servicer.

In the case of RMK, the CFPB found that the company disseminated millions of mortgage advertisements to military families that made deceptive representations or contained inadequate or impermissible disclosures in violation of the 2015 order, the Consumer Financial Protection Act, the Mortgage Acts and Practices Advertising Rule, and the Truth in Lending Act. Specifically, the company harmed military families and other consumers by sending millions of advertisements for mortgages that:

  • Tricked military families about the government’s role in sending the advertisements or providing the loans: RMK sent advertisements that misrepresented that RMK was, or was affiliated with, the VA or the FHA, that the VA or FHA sent the notices, or that the advertised loans were provided by the VA or FHA. Military families or others who view such advertisements may decide to purchase the advertised mortgage based on the trust they have in the government agencies.
  • Deceived borrowers about interest rates and key terms: RMK’s advertisements illegally disclosed a simple annual interest rate more conspicuously than the annual percentage rate, illegally advertised unavailable credit terms, and used the name of the homeowner’s current lender in a misleading way. Consumers who view such advertisements may be misled about the terms being offered or mistakenly believe their current lender is sending the advertisement.
  • Falsely misrepresented loan requirements and lied about projected savings from refinancing: RMK’s advertisements misrepresented that the benefits available to those who qualified for VA or FHA loans were time limited. Additionally, RMK’s advertisements misrepresented that military families could obtain VA cash-out refinancing loans without an appraisal and without incurring the cost of an appraisal, that an appraisal was not a condition of qualifying for VA cash-out refinancing loans, and that no minimum credit score and no income verification were required to qualify for VA cash-out refinancing loans. Finally, RMK’s advertisements misrepresented the amount of monthly payments, the annual savings under the advertised loans, and the cash available in connection with the advertised loans.

Enforcement Action

Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating federal consumer financial protection laws, including the Truth in Lending Act, which is intended to ensure that consumers can compare credit terms more readily and knowledgeably. Today’s order requires RMK to:

  • Exit the mortgage lending business: RMK is permanently banned from engaging in any mortgage lending activities, including advertising, marketing, promoting, offering, providing, originating, administering, servicing, or selling mortgage loans, or otherwise participating in or receiving remuneration from mortgage lending, or assisting others in doing so.
  • Pay a $1 million fine: RMK must pay a $1 million penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.

Today’s action is one in a series of actions the CFPB is taking to halt repeat offenders, particularly those that violate agency and court orders. The CFPB recently proposed a registry to detect repeat offenders in the financial marketplace. The action also complements broader efforts, including rulemaking by the Federal Trade Commission, to deter government and business impersonator scams.

Read today’s order.

Read I am a servicemember or veteran and I have decided to purchase a home. How do I know if a VA loan is the right fit for me?

Read more about VA loans.

Learn more about mortgage protections for veterans.

Consumers can submit complaints about financial products and services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their companies have violated federal consumer financial protection laws, including the Truth in Lending Act, are encouraged to send information about what they know to [email protected]. To learn more about reporting potential industry misconduct, visit the CFPB’s website.

###

The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.

Source: consumerfinance.gov

Posted in: Savings Account Tagged: 2015, About, action, Activities, Administration, Advertising, advertising practices, annual percentage rate, annual savings, Appraisal, Benefits, borrowers, Broker, business, california, CFPB, commission, companies, company, Consumer Financial Protection Bureau, Consumers, cost, court, Credit, credit score, Department of Veterans Affairs, design, Enforcement, Federal Trade Commission, FHA, FHA loans, Finance, Financial Wize, FinancialWize, fund, good, government, home, home loan, home loans, Homebuyers, Homeowner, Housing, in, Income, Income verification, industry, interest, interest rate, interest rates, language, Law, Learn, lending, loan, Loans, making, Marketing, markets, military, More, Mortgage, Mortgage Broker, mortgage lending, mortgage loan, mortgage loans, Mortgages, or, Other, payments, place, principal, products, protection, Purchase, rate, Rates, refinancing, right, Rohit Chopra, savings, scams, selling, selling mortgage, Series, servicemembers, Servicing, simple, states, The VA, time, trust, under, united, united states, VA, va home loan, VA loan, VA loans, veterans, veterans affairs, washington, will, work

Apache is functioning normally

May 31, 2023 by Brett Tams

After a relentless series of 10 interest rate hikes within a span of 15 months, the Federal Reserve’s Open Market Committee is poised to pause or potentially halt the upward trajectory as inflation shows signs of subsiding. As inflation gradually inches closer to the Fed’s target average of 2%, the inevitable outcome looms: a subsequent decline in interest rates

That means that the relatively good times bank savers have been experiencing may already have topped out. A look at average rates for certificates of deposit gives a glimpse of how bankers are seeing the future. According to recent national surveys from Bankrate.com, the average rate on a 1-year CD was yielding 1.68% while 5-year certificates offered yields 1.23%. With short-term rates starting to equal or even trend higher than long-term rates, it’s a signal that bankers are betting on long-term rates declining.

Right now, however, savers can keep their good times rolling by locking in rates on long-term CDs. According to the SmartAsset CD comparison tool, savers can snag a rate of 4.4% on two-year CDs, producing an annual percentage yield (APY) of 4.5%. That’s only slightly below the 12-month rate of 4.88% (5.1% APY).

For help making the right CD choices for yourself, consider working with a financial advisor.

How to Get the Most Out of CD Investments

At TIAA bank, savers can find a 12-month rate producing 4.75% APY but sacrifice just a bit of yield to lock in a 5-year certificate at 3.95% APY. The online Bread Savings (formerly Comenity Direct) offers a similarly yielding 4.25% APY 5-year CD, with the yield trimmed just a bit from the 5.2% APY produced by the banks’ 12-month certificate.

It can seem tempting to grab a higher-rate, shorter-term certificate right now, but the question is where savers will be able to take their money when it comes time to roll over their cash. When a 12-month CD paying 5% now expires a year from today, the only option for reinvesting could be CDs with yields lower than today’s long-term rates. In the year leading up to the pandemic, the average 5-year CD rate was a meager 1.1%.

When it comes to comparing CDs, rates can be listed as the stated interest and as the annual percentage rate (APY), which calculates the compounded yield of the rate after 12 months. In addition to the stated rate, the APY calculation also is based on how frequently interest is compounded. If a CD compounds annually, the stated rate will be the same as its APY. If the APY is higher than the stated rate, compounding takes place more than once a year.

Since 2020, long-term CD rates have gone from averaging 1.14% for 5-year certificates to as little as 0.26% – close to a record low – at the end of 2021 before climbing back up to 1.17% in February. The highest rates recorded in the past several decades occurred during the 1980s, when inflation pushed rates well into double-digits, with six-month CD rates hitting a state rate of 17.98% in August 1981.

The Bottom Line

Certificates of deposit, along with other insured bank products such as savings accounts or bank money market accounts, are good places to safely deposit cash. In most cases, however, those types of accounts won’t provide the growth needed to build a retirement fund that isn’t drained by inflation or produce the earnings required to support a potential 30-year retirement.

Investment Tips

  • A financial advisor can help you put together a strong investment strategy. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Fidelity recommends that you have 10 times your annual income saved for retirement by age 67. To find out if you’re on track, try SmartAsset’s retirement calculator. This free tool will estimate how much you’ll have when the time comes to retire.

Photo credit: ©iStock.com/Inside Creative House, ©iStock.com/Andrii Dodonov

Source: smartasset.com

Posted in: Investing, Money Basics Tagged: 2, 2021, 30-year, 5-year CD, advisor, age, annual percentage rate, average, Bank, banks, before, betting, Blog, build, calculator, CD, CD rates, CDs, certificates of deposit, Choices, comenity, compounding, cost, Credit, decades, deposit, double, earnings, fed, Federal Reserve, fidelity, Financial Advisor, financial advisors, Financial Goals, Financial Wize, FinancialWize, Free, fund, future, get started, goals, good, growth, house, How To, in, Income, Inflation, interest, interest rate, interest rates, interview, Investing, investment, investment tips, investments, low, LOWER, making, market, money, money market, money market accounts, More, offers, opportunity, or, Other, pandemic, place, products, rate, Rate Hikes, Rates, ready, relentless, retirement, retirement fund, returns, right, sacrifice, savings, Savings Accounts, Series, short, surveys, target, the fed, TIAA Bank, time, tips, trend, will, working

Apache is functioning normally

May 30, 2023 by Brett Tams

Originally founded as Social Finance in 2011 to help borrowers manage student loan debt, SoFi started offering mortgages in 2014. Today, the company has funded more than $50 billion in loans, which include everything from wedding loans to auto loan refinancing. The company offers a wide range of services including investing, credit cards and checking accounts for more than 4 million members. Those interested in and eligible for a mortgage can prequalify online in less than two minutes. The lender typically issues conditional approvals in one to two business days, with closings on purchases currently averaging 30 days.

Breakdown of SoFi overall score

  • Affordability: As an online lender, SoFi’s mortgage rates are very competitive. Notably, you’ll pay a flat lender fee instead of a percentage-based fee. Depending on the price of your home, this might mean you save some money.
  • Availability: SoFi lends to borrowers in the majority of states in the U.S. It has limited mortgage options, however, and requires a higher down payment (unless you’re a first-time homebuyer).
  • Borrower experience: SoFi is a membership-driven company that does business primarily online, so you can expect convenience when working with this lender. You’ll need to become a member to take full advantage of some of its perks, however.

Affordability: 5/5

SoFi updates its 10-year, 15-year, 20-year and 30-year APRs daily on its website. All publicly advertised rates assume you’re making a 20 percent down payment, however. To get loan offers tailored to your situation, you’ll need to provide some contact information and other details via an online form.

SoFi charges a $1,495 administration fee, according to a company spokesperson, but SoFi members get $500 off this cost. (Membership is free.)

Note: You can lock in your rate with SoFi for 90 days at the time you’re preapproved. However, if you don’t enter into a purchase agreement by day 60 of the 90-day window, you’ll be subject to a $250 fee. This’ll be refunded at closing. On the plus side, if you do sign a purchase agreement by day 30 of the 90-day period, you’ll get a 0.125 percent further discount on your rate.

Availability: 5/5

While SoFi is licensed to lend mortgages in most states, it only offers conforming and non-conforming (jumbo) conventional loans; it doesn’t offer government-backed products like FHA loans. To qualify, you’ll need a credit score of at least 620 and a debt-to-income (DTI) ratio of no more than 50 percent. If you’re an eligible first-time homebuyer, you can get a conventional loan for as little as 3 percent down. If it’s not your first home, however, you’ll need to put down 5 percent, at minimum.

Borrower experience: 4.7/5

SoFi has been providing mortgages since 2014, originating more than $6 billion in loan volume on that front to date. While the company isn’t accredited by the Better Business Bureau, it does have an A+ rating from the organization, along with “Great” reviews from Trustpilot.

SoFi is a digitally-focused company, and its mobile app is in the top 100 finance apps in the Apple App Store. You can complete the entire application for a mortgage online; there’s also a Home Loan Help Center with calculators, insights into local housing markets and other information to help with the home-buying process. If you need help with your loan at any point, you can call 833-408-7634 Monday through Friday from 8 a.m. to 8 p.m. CT, or Saturday, 10 a.m. to 2 p.m. CT.

Refinancing with SoFi

You can refinance your current mortgage with SoFi. With a traditional refinance, you only need to have 5 percent equity in the home. For a cash-out refinance, you’ll need at least 20 percent equity.

The company also offers student loan cash-out refinances, which allow you to pay off your student debt and refinance your mortgage at the same time. You’ll need to do the math to determine if that move would actually save you money in the long run. Existing SoFi members can save $500 on refinancing costs.

Alternatives to SoFi

Methodology

Bankrate’s expert editorial team collects lender information through a variety of methods. We contact lenders directly, and we also turn to regulatory filings and to assessments by third parties. Our research takes into account three main factors – affordability, availability and borrower experience.

Bankrate’s reporters and editors have decades of experience covering the mortgage industry. They’re skilled at gathering information through interviews and by scouring regulatory filings. Bankrate evaluates more than 85 lenders for factors relating to affordability, availability and customer experience, assigning each a Bankrate Score out of five stars. Here’s how we assess each of the categories:

  • Affordability. Loan cost is a deciding factor for many borrowers. We look at two metrics: 1) a lender’s lowest advertised annual percentage rate (APR) based on Bankrate’s sample scenario, which assumes a 740 or higher credit score and a 20 percent down payment, among other factors and 2) established-customer discounts or incentive pricing, when applicable.
  • Availability. Another factor is how quickly your loan application will be approved, and how many loan programs the lender offers. So we evaluate approval and closing timelines and diversity of loan products.
  • Customer experience. Finally, we delve into what it’s like to deal with the lender as a consumer. We look at the lender’s application process and availability of customer service support. We also consider the results of J.D. Power’s 2022 Mortgage Origination Satisfaction Survey.

Bankrate’s editorial team confirms the accuracy of data at the time of publication. Our team is dedicated to maintaining the timeliness of information – the mortgage industry is changing constantly, so we regularly revisit these reviews to update them.

Bankrate’s methodology page spells out our rating process in greater detail.

Source: thesimpledollar.com

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Apache is functioning normally

May 30, 2023 by Brett Tams

A variety of significant mortgage rates trended upward over the last seven days. The average interest rates for both 15-year fixed and 30-year fixed mortgages both saw an increase. For variable rates, the 5/1 adjustable-rate mortgage also notched higher.

On the heels of cooling inflation, the Federal Reserve announced on May 3 a 25-basis-point increase to its benchmark short-term interest rate. The Fed’s May meeting marks what could be the last increase we see for the time being. The central bank has signaled that it may soon be time to pause on rate hikes. Depending on incoming inflation data, the next step would be to hold rates where they are for an extended period of time in order to bring inflation down to its 2% target.

As long as inflation continues to trend downward, experts say a pause in rate hikes from the Fed could bring some stability to today’s volatile mortgage rate market.

Mortgages hit a 20-year high in late 2022, but now the macroeconomic environment is changing again. Rates dipped significantly in January before climbing back up in February. Throughout March and April, rates fluctuated in the 6% range.

“Ultimately, more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates,” says Odeta Kushi, deputy chief economist at First American Financial Corporation.

While rates don’t directly track changes to the federal funds rate, they do respond to inflation. Overall, inflation remains high but has been slowly but consistently falling every month since it peaked in June 2022.

After raising rates dramatically in 2022, the Fed opted for smaller, 25-basis-point rate increases in its first three meetings of 2023. The decision to hike by 0.25% on May 3 suggests that inflation is cooling and the central bank may soon be able to pause its rate hiking regime. While the central bank is unlikely to cut rates any time soon, positive signaling from the Fed and cooling inflation may ease some of the upward pressure on mortgage rates.

“If inflation keeps coming down, that will be the biggest driver, outside of the Fed, that’s really going to help bring rates down to a better level and improve affordability for home buyers,” says Scott Haymore, head of capital markets and mortgage pricing at TD Bank.

However, mortgage rates remain well above where they were a year ago. Fewer buyers are willing to jump into the housing market, driving demand down and causing home prices in some regions to ease, but that’s only part of the home affordability equation.

“Even though home prices in many parts of the country have fallen since the start of the year, high rates make buying prohibitively expensive for many,” says Jacob Channel, senior economist at loan marketplace LendingTree. It’s still difficult for many buyers, particularly those looking for their first home, to afford a monthly payment.

What does this mean for homebuyers this year? Mortgage rates are likely to decrease slightly in 2023, although they’re highly unlikely to return to the rock-bottom levels of 2020 and 2021. However, rate volatility may continue for some time. “Expect mortgage rates to yo-yo up and down in the first half of the year, at least until there is a consensus about when the Fed will conclude raising interest rates,” says Greg McBride, CFA and chief financial analyst at Bankrate. (Like CNET Money, Bankrate is owned by Red Ventures.) McBride expects rates to fall more consistently as the year progresses. “Thirty-year fixed mortgage rates will end the year near 5.25%,” he predicts.

Rather than worrying about market mortgage rates, homebuyers should focus on what they can control: getting the best rate they can for their situation.

“The most important thing is that they find the right home. The second most important thing is obviously to find the most efficient way to finance it,” says Melissa Cohn, regional vice president of William Raveis Mortgage.

Take steps to improve your credit score and save for a down payment to increase your odds of qualifying for the lowest rate available. Also, be sure to compare the rates and fees from multiple lenders to get the best deal. Looking at the annual percentage rate, or APR, will show you the total cost of borrowing and help you compare apples to apples.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.04%, which is an increase of 15 basis points from seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.42%, which is an increase of 18 basis points compared to a week ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. But a 15-year loan will usually be the better deal, as long as you can afford the monthly payments. You’ll usually get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 5.87%, an uptick of 8 basis points from seven days ago. You’ll usually get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 adjustable-rate mortgage in the first five years of the mortgage. However, you may end up paying more after that time, depending on the terms of your loan and how the rate adjusts with the market rate. Because of this, an adjustable-rate mortgage could be a good option if you plan to sell or refinance your house before the rate changes. Otherwise, changes in the market mean your interest rate may be much higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022. Now, mortgage rates are roughly twice what they were a year ago, pushed up by persistently high inflation. That high inflation prompted the Fed to raise its target federal funds rate seven times in 2022. By raising rates, the Fed makes it more expensive to borrow money and more appealing to keep money in savings, suppressing demand for goods and services.

Mortgage interest rates don’t move in lockstep with the Fed’s actions in the same way that, say, rates for a home equity line of credit do. But they do respond to inflation. As a result, cooling inflation data and positive signals from the Fed will influence mortgage rate movement more than the most recent 25-basis-point rate hike.

We use data collected by Bankrate to track changes in these daily rates. This table summarizes the average rates offered by lenders nationwide:

Current average mortgage interest rates

Loan type Interest rate A week ago Change
30-year fixed rate 7.04% 6.89% +0.15
15-year fixed rate 6.42% 6.24% +0.18
30-year jumbo mortgage rate 7.09% 6.93% +0.16
30-year mortgage refinance rate 7.12% 7.03% +0.09

Rates as of May 22, 2023.

How to find personalized mortgage rates

You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. Make sure to consider your current financial situation and your goals when looking for a mortgage.

Things that affect the mortgage rate you might get include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. Having a higher credit score, a larger down payment, a low DTI, a low LTV or any combination of those factors can help you get a lower interest rate.

Apart from the mortgage interest rate, factors including closing costs, fees, discount points and taxes might also affect the cost of your house. Be sure to speak with multiple lenders — such as local and national banks, credit unions and online lenders — and comparison-shop to find the best loan for you.

What is a good loan term?

One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are stable for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only set for a certain amount of time (commonly five, seven or 10 years). After that, the rate changes annually based on the market rate.

When deciding between a fixed-rate and adjustable-rate mortgage, you should consider how long you plan to stay in your home. Fixed-rate mortgages might be a better fit for people who plan on staying in a home for a while. Fixed-rate mortgages offer more stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you aren’t planning to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. There is no best loan term as an overarching rule; it all depends on your goals and your current financial situation. Make sure to do your research and understand your own priorities when choosing a mortgage.

Source: cnet.com

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Apache is functioning normally

May 28, 2023 by Brett Tams

A summer vacation can feel like a seasonal rite of passage — a sacred time to break away from the demands of everyday life in favor of fun and relaxation.

But summer can also be an expensive time to travel, which makes it hard to budget enough money for your vacation.

Though it’s best to pay in cash for nonessential travel, there are financing options available, including credit cards, “buy now, pay later” plans and vacation loans. Consider the interest rate and how long you’ll be in debt when deciding which to choose.

The challenges of budgeting for summer travel

Travel demand is in “near-record territory” with all indicators pointing to a “very robust summer leisure travel season,” the U.S. Travel Association, a nonprofit that monitors the U.S. travel industry, said in an email. According to the association, demand has driven up prices in sectors like airfare and lodging.

Even without higher prices, travel is tough to budget for, says Jake Northrup, a certified financial planner in Bristol, Rhode Island.

“Travel usually comes in big waves, and there’s just a lot of uncertainty as to what things will actually cost,” Northrup says.

Adrienne Davis, a certified financial planner in the Washington, D.C., area, says her clients often receive last-minute offers to go on trips with friends or family, which leads to a cash shortage.

“We don’t expect prices to be that high when it’s time to book,” Davis says. “And if your money is already allocated on a month-to-month basis, it’s like, ‘Wow, where am I going to get this extra $500 or $1,000?’”

Northrup and Davis emphasize it’s best to avoid taking on debt for a vacation. But because a trip can mean precious time with loved ones or an enriching personal experience, it’s reasonable to explore your options.

“I certainly understand sometimes the best decision that you can make is not the most financially optimal one, and that’s OK,” Northrup says.

Credit cards, ‘buy now, pay later’ and vacation loans

Davis prefers a credit card if you must finance a trip because you’ll likely earn points or cash back, which can offset costs. Some cards come with protections, she says, like travel insurance.

But interest rates on credit cards are high, which is why Davis recommends getting a card with a 0% annual percentage rate and paying off the balance during the initial promotional period — typically 15 to 21 months — before regular interest kicks in.

Companies like Affirm and Uplift offer buy now, pay later plans for travel. These plans divide your purchase into equal installments that you pay over time, and interest rates vary.

Uplift partners with airlines, resorts and other travel companies, including some that offer zero-interest financing and terms up to 24 months, depending on the partner and loan amount. Affirm offers no-interest options with terms up to 60 months.

Northrup prefers buy now, pay later if it’s zero interest, but like any debt, it’s important to prioritize repayment to avoid fees or hits to your credit.

A travel loan, or an unsecured personal loan from a bank, an online lender or a credit union, is another option. These loans are larger, and rates vary based on your credit score and debt-to-income ratio. Repayment is typically two to seven years, so consider how long you want to be in debt after your vacation.

Saving for your next trip

Unpacking your bags after a trip with zero debt to repay is a great feeling. Here are tips for saving for your next vacation:

Start now: Time is your most valuable resource when saving. Start putting aside money now for next summer, even if you don’t have a trip planned, Davis says. By saving $85 per month, you’d have over $1,000 saved in a year.

Open a high-yield savings account: Davis and Northrup advise their clients to put travel-specific funds in a separate high-yield savings account. You’ll earn interest, and you won’t accidentally dip into the funds to cover other expenses.

Pick the destination last: Many travelers pick their destination first, then try to come up with the money. But you can reverse that process, Northrup says, by “backing into” the trip you want. See what you have saved, then choose a destination based on that figure.

This article was written by NerdWallet and was originally published by The Associated Press. 

Source: nerdwallet.com

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Apache is functioning normally

May 28, 2023 by Brett Tams

How Bankrate scored Third Federal Savings and Loan

To determine Third Federal Savings and Loan’s Bankrate Score, Bankrate’s editorial team rated it and other lenders on a scale of one to five stars based on a variety of factors relating to the lender’s products and services. (Bankrate’s partners compensate us, but our opinions are our own, and partner relationships do not influence our reviews.) We derived its overall score by considering three basic factors:

  • Affordability: Third Federal’s mortgage rates are largely below Bankrate’s averages, and you can save on upfront closing costs with the bank’s low-cost options.
  • Availability: The bank serves borrowers in 25 states and Washington, D.C., and doesn’t offer government loans.
  • Borrower experience: Third Federal has a broad range of customer service hours and lots of online resources to help guide you through the mortgage process.

Affordability: 5/5

Affordability differs from lender to lender, so comparing costs is key. Third Federal Savings and Loan clearly displays mortgage rates on its website. These rates are generally competitive and updated regularly, and you can set up automatic rate alerts to get a notification when rates drop below a certain level. If you input some details about your desired loan, you can get even more information, such as the estimated payment and closing costs or how much you could save on the interest rate by paying for points.

The bank charges common closing costs that can include an origination fee, but also offers a lower-upfront cost option for virtually every type of loan that keeps these costs to just $295. These low-cost loans have a higher interest rate, however, so you’ll have a higher monthly payment and your borrowing costs could amount to much more over the life of your loan. Additionally, while there’s no fee to get a preapproval, you might be charged an application fee depending on the type of mortgage you’re seeking. Notably, the bank also offers a $750 closing cost credit to first-time homebuyers.

Availability: 4/5

This factor can make the overall mortgage application process smoother or more challenging. Third Federal Savings and Loan works with borrowers in 25 states, so you’ll need to confirm whether it services yours before you apply for a mortgage with the bank. Its loan offerings include conventional loans as well as construction loans and financing for investment properties. The bank doesn’t offer government-insured mortgages, however.

Borrower experience: 4.7/5

Know what to expect when you work with a specific lender. Third Federal Savings and Loan has 80 years of experience lending to borrowers in Ohio and elsewhere in the U.S. The bank has an A- rating from the Better Business Bureau. Its website makes it easy to check available rates, get preapproved, apply for a loan and sign the required paperwork. Before you apply, you can use the bank’s useful calculators to determine how much home you can afford and to estimate your monthly payment. Once you get your loan online, you can use the Third Federal app to manage it; however, you can’t apply for the loan itself directly through the app.

How to apply for a mortgage with Third Federal Savings and Loan

You can apply for a purchase loan or a refinance in person at one of the bank’s branches, on Third Federal’s website or by calling 1-800-THIRD-FED.

Here are some tips to prepare for the process:

  1. Check your credit report. It’s important to check your credit report before your lender does, in case there are errors that could impact not only whether you get preapproved but also your ability to get the best mortgage rate. Knowing your credit score also helps you decide what type of loan to apply for. If your score is in the very low 600s, for instance, an FHA mortgage might be best for you, as its standards are more lenient than those for conventional loans.
  2. Gather personal and financial documents. With any lender, you must supply documentation about your income, assets and debts. This includes pay stubs and W-2s and account and loan statements.
  3. Provide details about the property. You’ll need to provide the address of the home and submit to an appraisal. (If you’re refinancing, you might or might not need an appraisal.)

Refinancing with Third Federal Savings and Loan

Third Federal Savings and Loan offers refinancing at competitive rates in line with Bankrate’s averages. You can apply to refinance your loan through the bank’s website, either to take equity out of your home, refinance your existing balance to a lower rate or shorter term (or both) or consolidate debt. The bank’s low-cost loans ($295 closing costs) are also available for refinances.

Methodology

Bankrate’s expert editorial team collects lender information through a variety of methods. We contact lenders directly, and we also turn to regulatory filings and to assessments by third parties. Our research takes into account three main factors – affordability, availability and borrower experience.

Bankrate’s reporters and editors have decades of experience covering the mortgage industry. They’re skilled at gathering information through interviews and by scouring regulatory filings. Bankrate evaluates more than 85 lenders for factors relating to affordability, availability and customer experience, assigning each a Bankrate Score out of five stars. Here’s how we assess each of the categories:

  • Affordability. Loan cost is a deciding factor for many borrowers. We look at two metrics: 1) a lender’s lowest advertised annual percentage rate (APR) based on Bankrate’s sample scenario, which assumes a 740 or higher credit score and a 20 percent down payment, among other factors and 2) established-customer discounts or incentive pricing, when applicable.
  • Availability. Another factor is how quickly your loan application will be approved, and how many loan programs the lender offers. So we evaluate approval and closing timelines and diversity of loan products.
  • Customer experience. Finally, we delve into what it’s like to deal with the lender as a consumer. We look at the lender’s application process and availability of customer service support. We also consider the results of J.D. Power’s 2022 Mortgage Origination Satisfaction Survey.

Bankrate’s editorial team confirms the accuracy of data at the time of publication. Our team is dedicated to maintaining the timeliness of information – the mortgage industry is changing constantly, so we regularly revisit these reviews to update them.

Bankrate’s methodology page spells out our rating process in greater detail.

Source: thesimpledollar.com

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Apache is functioning normally

May 27, 2023 by Brett Tams

Mortgage borrowers generally aren’t big shoppers, and they could be leaving three-figure sums on the table each month because of it, independent researchers found in a new study of what loans have sold for in the market.

“We found that price dispersion for mortgages is often around 50 basis points of the annual percentage rate,” the study’s authors, Alexei Alexandrov and Elizabeth Saunders, said in the analysis of 2021 Home Mortgage Disclosure Act data.

Looking at the median loan size and fixed rate range for a typical mortgage from that year ($300,000 and 3%-3.5%, respectively), the two researchers determined the monthly payments available would be between $1,235 and $1,347 (an $82 difference).

They then re-ran the numbers, accounting for the runup in rates over the past year. In doing so, Alexandrov and Saunders found the monthly payment range for 6.5% to 7% mortgages would be $1,896-$1,996, (a $100 difference).

If rates rose even higher, the savings available could be even greater, the study published by the Consumer Financial Protection Bureau noted. (The CFPB said that it did not endorse or necessarily share the views of the study’s authors.)

While higher rates do tend to make lenders more willing to compete based on price, particularly in the wholesale channel, it’s not a given that all mortgage companies will.

“Competition in the mortgage market is not always channeled into lower prices,” the authors of the CFPB study noted

Reasons for this cited in the study were:

  • “Lenders with less restrictive overlays … might charge higher prices, to compensate for the additional risk,” they researchers said. (Overlays are additional criteria beyond those government-related entities apply to loans the back for lenders. A high percentage of mortgages in the United States are currently agency-backed.)
  • Different lending business models have different costs associated with them, depending on factors like whether they have physical branches and retain servicing or not.
  • When demand increases or is high like it was due the availability of historically lower rates in 2021, lenders will sometimes raise their prices with the aim of limiting volume to levels they have the capacity to process.

Source: nationalmortgagenews.com

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Apache is functioning normally

May 27, 2023 by Brett Tams

Both 10-year fixed and 15-year fixed refinances saw their mean rates climb sharply this week. The average rate on 30-year fixed refinances also made gains.

Amid its ongoing battle to fight inflation, the Federal Reserve announced a 0.25% hike to its target federal funds rate on May 3. Refinance rates, like mortgage rates, fluctuate on a daily basis and could see further movement in response, or they could stay generally the same.

“The market has already built in the expectations for a 25-basis-point hike in May and then no further hikes after that,” says Scott Haymore, head of capital markets and mortgage pricing at TD Bank.

With inflation falling steadily from its peak last summer, the Fed has signaled that the end of the current rate hiking cycle may be in sight. Depending on incoming inflation data, the Fed may hold rates where they are — but not cut them — until inflation reaches its 2% goal.

“Ultimately, more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates,” says Odeta Kushi, deputy chief economist at First American Financial Corporation.

As the Fed aggressively ratcheted up its federal funds rate in 2022, refinance rates spiked, but we’re seeing signs that rates may be slowly starting to level out as inflation eases.

For the first three meetings of 2023, the Fed has adopted smaller rate increases — 25 basis points as compared with the 75- and 50-basis-point increases common last year — as it waits to see the cumulative effects of policy changes on inflation.

Looking at average mortgage rate data for the past year, mortgage rates hit a peak in late 2022 and have been trending down since then. We’re still a long way from the record-low refinance rates of 2020 and 2021, but borrowers may see rates fall in 2023.

“With the backdrop of easing inflation pressures, we should see more consistent declines in mortgage rates as the year progresses, particularly if the economy and labor market slow noticeably,” says Greg McBride, CFA and chief financial analyst at Bankrate. (Bankrate, like CNET Money, is owned by Red Ventures.) He expects 30-year fixed mortgage rates to end the year near 5.25%.

Regardless of where rates are headed, homeowners shouldn’t focus on timing the market, and should instead decide if refinancing makes sense for their financial situation. As long as you can get a lower interest rate than your current rate, refinancing will likely save you money. Do the math to see if it makes sense for your current finances and goals. If you do decide to refinance, make sure you compare rates, fees, and the annual percentage rate — which shows the total cost of borrowing — from different lenders to find the best deal.

30-year fixed-rate refinance

For 30-year fixed refinances, the average rate is currently at 7.21%, an increase of 12 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) One reason to refinance to a 30-year fixed loan from a shorter loan term is to lower your monthly payment. This makes 30-year refinances good for people who are having difficulties making their monthly payments or simply want a bit more breathing room. Be aware, though, that interest rates will typically be higher compared to a 10- or 15-year refinance, and you’ll pay off your loan at a slower rate.

15-year fixed-rate refinance

The current average interest rate for 15-year refinances is 6.62%, an increase of 24 basis points from what we saw the previous week. A 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan. On the other hand, you’ll save money on interest, since you’ll pay off the loan sooner. Interest rates for a 15-year refinance also tend to be lower than that of a 30-year refinance, so you’ll save even more in the long run.

10-year fixed-rate refinance

The current average interest rate for a 10-year refinance is 6.71%, an increase of 23 basis points compared to one week ago. Compared to a 15- or 30-year refinance, a 10-year refinance will usually have a lower interest rate but higher monthly payment. A 10-year refinance can help you pay off your house much faster and save on interest in the long run. Just be sure to carefully consider your budget and current financial situation to make sure that you can afford a higher monthly payment.

Where rates are headed

At the start of the pandemic, refinance interest rates hit a historic low. But in early 2022, the Fed started hiking interest rates in an effort to curb runaway inflation. While the Fed doesn’t directly set mortgage rates, the Fed rate hikes led to an increased cost of borrowing among most consumer loan products, including mortgages and refinances. Mortgage rates hit a 20-year high in late 2022.

Recent data shows that overall inflation has been falling slowly but steadily since it peaked in June 2022, but it still remains well above the Fed’s 2% inflation goal. After raising rates by 25 basis points in March, the Fed has indicated (PDF) it plans to slow — but not stop — the pace of its rate hikes throughout 2023. Both of these factors are likely to contribute to a gradual pull-back of mortgage and refinance rates this year, although consumers shouldn’t expect a sharp drop or a return to pandemic-era lows.

We track refinance rate trends using information collected by Bankrate. Here’s a table with the average refinance rates provided by lenders across the country:

Average refinance interest rates

Product Rate A week ago Change
30-year fixed refi 7.21% 7.09% +0.12
15-year fixed refi 6.62% 6.38% +0.24
10-year fixed refi 6.71% 6.48% +0.23

Rates as of May 26, 2023.

How to find personalized refinance rates

It’s important to understand that the rates advertised online often require specific conditions for eligibility. Your interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application.

Having a high credit score, a low credit utilization ratio and a history of consistent and on-time payments will generally help you get the best interest rates. You can get a good feel for average interest rates online, but make sure to speak with a mortgage professional in order to see the specific rates you qualify for. To get the best refinance rates, you’ll first want to make your application as strong as possible. The best way to improve your credit ratings is to get your finances in order, use credit responsibly and monitor your credit regularly. Don’t forget to speak with multiple lenders and shop around.

Refinancing can be a great move if you get a good rate or can pay off your loan sooner — but consider carefully whether it’s the right choice for you at the moment.

When to consider a mortgage refinance

Most people refinance because the market interest rates are lower than their current rates or because they want to change their loan term. When deciding whether to refinance, be sure to take into account other factors besides market interest rates, including how long you plan to stay in your current home, the length of your loan term and the amount of your monthly payment. And don’t forget about fees and closing costs, which can add up.

As interest rates increased throughout 2022, the pool of refinancing applicants contracted. If you bought your house when interest rates were lower than they are today, there may not be a financial benefit in refinancing your mortgage.

Source: cnet.com

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